Live Hand To Mouth In 2020?

An independent survey commissioned by Prudential has found that a significant 48 per of the 1,024 Malaysian participants approaching retirement are fearful they will not have enough money to retire. Four out of five pointed to rising inflation as the main culprit, saying it has seriously affected their lifestyle. Four out of 10 see themselves working beyond the mandatory retirement age.

The survey was conducted in August, on the heels of inflation running up to a 27-year high of 8.5 per cent after massive fuel, food and transport price increases, and gave an insight into how pessimistic they are about their savings. The finding could have been even more negative if another survey is conducted today.

Although they have a high propensity to save - 72 per cent claim they do save for retirement - their current savings behaviour shows a lack of proper planning. Among those who save, 77 per cent invest in traditional but low-yielding vehicles such as bank fixed deposits and savings accounts. Yes, these are secured instrument but they would not give the yield needed to retire at 55 as in reality they are losing money due to the higher inflation rate.

Equity and investment-linked products tended to offer better returns over the longer term but the disastrous implosion of the US sub-prime and investment instruments packaged with it had eroded investor confidence.

Few Malaysians are focused on saving for retirement. Forty-one per cent put aside as much as they can, hoping it will suffice - but nine out of 10 do not have the discipline and would dip into retirement savings if they had to.

The lack of retirement reserves is a national concern as wages are not in keeping with inflation. Only a fifth think EPF money will meet their retirement needs. Worrying, EPF own survey found that its members' retirement funds last an average of three years. Given longer mortality rates and rising living costs, the problem is obviously challenging.